When You’re In A Hole, Threaten The Shovel

Michael Hedges September 18, 2017 - Follow on Twitter

The world changes. Some are OK with this, others not so much. Corporate media strategies, too, adapt to the times, some more reluctantly than others. The quest for scale endures. It doesn’t always fix the problem. A toxic brand has few options.

The bid by 21st Century Fox (21CFox) to acquire outstanding shares in pay-TV company Sky plc was handed another delay this past week and a new complication. UK Digital, Culture, Media and Sport (DCMS) Secretary of State Karen Bradley informed parliament she was referring the take-over to the Competition and Markets Authority (CMA). This stretches any possible approval of the transaction deep into next year and will certainly bring on further media attention.

Before the new year 21CFox agreed with Sky plc shareholders on a GB£11.7 billion (then US$14.6 billion, now US$15.5 billion) acquisition of the 61% outstanding stake in Sky plc. Timing being everything in big transactions, 21CFox would, then, benefit from a 15% drop in the GB£/US$ exchange rate after the Brexit referendum. Earlier last year Sky plc consolidated UK, Irish, Italian, German and Austrian operating companies. There was - and still is - little doubt a fully integrated Sky plc and 21CFox adds significantly to the profitability of sports and movie offerings.

The potential of a delay became obvious in early August even after UK regulator OFCOM saw no media plurality issues. The European Commission DG Competition also waved it through. DCMS Secretary Bradley broadly hinted (September 12) that other issues might be included in a further review of the deal by the CMA and offered all parties 10 days to comment. That was declined and the CMA referral was announced two days later.

“We are surprised that after independent regulatory scrutiny and advice, and over four months to examine the case, the Secretary of State is still unable to form an opinion,” said the initial 21CFox statement (September 12). “We urge the Secretary of State to take a final decision quickly. We look forward to engaging with the CMA on their in-depth review as soon as possible.”

Fallout from the widely-reported phone-hacking scandal forced News Corporation to scuttle (July 2011) an earlier bid for Sky plc, then known as BSkyB. A week earlier the News International subsidiary of News Corporation closed tabloid News Of The World, reporters and editors of which had been arrested. Two years later News Corporation split off entertainment - television and film - assets into 21st Century Fox. Print assets in the UK and elsewhere were domiciled at News Corporation. Both companies are principally owned by the Murdoch family.

Any action related to the Murdoch family and its broad media holdings is mired in UK politics. Scion Rupert Murdoch has long had a back-door, literally, into the Conservative Party and welcomed last year’s referendum vote to leave the European Union, known as Brexit. Increased popular anxieties following the Brexit decision have vacated the tour de force expected by the Conservative Party, now holding on by a feather. DCMS Secretary Bradley, a Conservative Party appointee, is certainly reading the tea-leaves.

”I think it is important that there is confidence in whatever decision is taken,” said DCMS Secretary Bradley to then Royal Television Society, quoted by Reuters (September 14). “It is important for public confidence that the full review takes place by the CMA. I want them to look at the concerns that have been raised, you will see when we publish all the information on this exactly why the referral has been made.”

The CMA has been asked to take a further 24 weeks to evaluate the 21CFox bid for Sky plc. Even though legally a separate company, News Corporation UK newspaper titles - the Times, Sunday Times and tabloid Sun - will received considered attention in terms of potential ownership concentration. To that will be added corporate responsibility at 21CFox, from sexual assault and racial harassment lawsuits to touting debunked right-wing conspiracy theories and being a leading purveyor of fake news, uncorking the stench from the phone-hacking scandals.

A crumb tossed to UK regulators two weeks earlier fell ungraciously to earth. 21CFox dropped US right-wing channel Fox News from the Sky bouquet saying it drew but a tiny audience. Other 21CFox channels draw small audiences in the UK; it’s the pay-TV subscribers that matter. Fox News was not adapted for the UK market, just something on the shelf. Fox News has shed several executives and celebrity show hosts over the last year for tabloid-scale behavior issues. Sky plc is widely considered an exemplary broadcaster, free of major complaints or controversies.

Also speaking to the Royal Television Society last week, James Murdoch - Sky plc chairman and 21CFox chief executive - unleashed a barely-veiled challenge to UK politicians: approve our deal or else. “Inward investment in the UK creative economy and the positive signal it sends to companies around the world is more important than ever as the UK prepares to chart its course outside the EU,” he offered. “If the UK truly is open for business post-Brexit, we look forward to moving through the regulatory review process and this transformative transaction for the UK creative sector becoming an affirmation of that claim.”

See also in ftm Knowledge

Rupert Murdoch, News Corporation and 21st Century Fox

News Corporation is a highly competitive media giant a global, multi-media footprint. From paywalls and pay-TV to tabloid troubles and new ventures the media industry watches Rupert Murdoch. Update includes family ties, succession plans and other News Of The World. 210 pages PDF (September 2012)

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